Schumer: Urges Immediate Implemetation of New Plan that Could Save Drivers 5 Cents A Gallon

SCHUMER: URGES IMMEDIATE IMPLEMENTATION OF NEW PLAN THAT COULD SAVE DRIVERS 5 CENTS A GALLON; LIFTING OF STEEP TARIFF ON FOREIGN ETHANOL IMPORTS

Gasoline Is Now 10% Ethanol; Ethanol Additive Is Expensive and Supplies Are in High Demand, Cheaper Imports Could Save Consumers Until Domestic Supply is Bolstered

Coupled With Already Sky-High Gas Prices, 54 Cent Tariff on Foreign Imports of Ethanol Limits Supply and Raises Prices at the Pump

Senator Will Introduce Legislation to Waive Tariff During Summer Driving Season and Increase Incentives for Ethanol Production

The summer driving season has not even hit full stride and gas prices are already at record levels in New York City and around the nation. New requirements forcing gasoline to be blended with ethanol, a shortage of production of domestic ethanol and a huge tariff on each gallon of imported ethanol increase prices at the pump for every New Yorker. Today U.S. Senator Chuck Schumer urged the immediate temporary lifting of the steep tariff on foreign ethanol imports to increase the supply of this federally-mandated fuel additive, which could quickly reduce the gas costs for consumers by about 5 cents per gallon. Schumer will introduce separate pieces of legislation to remove the tariff temporarily on imports and encourage new ethanol production in states where there is high consumption and little or no current production.

Schumer said, "New Yorkers are getting hit harder than most Americans at the gas pump. Because we don't yet produce ethanol, we are reliant either on a limited domestic supply or on a much more expensive foreign supply of it, which makes up 10% of each gallon of gas. In order to solve this problem in the short and long term we need to do two things. First we need to immediately drop the 54 cent per gallon tariff on imported ethanol until domestic production can keep up; and second we need encourage more domestic production of ethanol in states like ours that don't produce but do use ethanol."

"The summer isn't even here yet and consumers are being tipped upside down at the pump," Schumer continued. "Without immediate and concrete efforts by the federal government, we could see 4 dollar a gallon gasoline, drastically increased airline tickets, and the average American family will be stuck with the bill."

Currently, ethanol produced outside of the United States is subject to a $0.54 cents per gallon tariff meant to level the playing field for domestic ethanol producers in competition against cheaper, foreign produced ethanol. As a result of federal regulations and the ethanol mandate included in the recently passed Energy Bill, gasoline sold in New York is approximately 10% ethanol by volume. According to data provided by Platts, the price of ethanol in the New York Harbor Market was $2.85 per gallon, about $0.53 higher than the gasoline it must be blended with before being sold. By suspending this tariff throughout the summer driving season, Schumer's proposal would create the necessary circumstances to temporarily allow more foreign ethanol into the country, thereby increasing supplies and lowering ethanol prices. As the price of ethanol would move closer to the price of the gasoline it must be blended with, retail prices at the gasoline pump would be lowered.

In order to increase domestic production of ethanol plants in New York and other states that consume a lot of fuel and produce little; Schumer will introduce a new tax incentive that would benefit non-traditional producers of ethanol. The tax incentive would allow a larger depreciation schedule for new ethanol facilities to states that produce less than two percent of the entire ethanol supply yet consume 2 percent or more of the total gasoline purchased in America.

http://schumer.senate.gov/SchumerWebsite/pressroom/press_releases/2006/PR150.NYC%20Ethanol.050706.html